GOP: Change spending side of Pa. tax system, too

Changing Pennsylvania's property tax system should be paired with spending reforms, or else it's not effective, said the top Republican on the House Finance Committee.

ERIC BOEHM

HARRISBURG — Changing Pennsylvania's property tax system should be paired with spending reforms, or else it's not effective, said the top Republican on the House Finance Committee.

"If you don't discuss the cost side of the equation, finding new sources of revenue is just a dog chasing its tail," said state Rep. Kerry Benninghoff, R-Centre, chairman of the House Finance Committee. "It's not an isolated issue."

Local government organizations and business groups echoed that message during a committee hearing Monday to consider a bill from state Rep. Seth Grove, R-York, that would give local governments two options for generating revenue if they wanted to reduce property taxes.

The bill is intended to broaden the base of local taxes used to fund the bulk of basic education costs and relieve what is widely viewed as an unfair and unbalanced tax on the state's residents.

The committee did not vote on Grove's proposal, and no timetable for its consideration has been set, Benninghoff said.

Republican House leadership and the Corbett administration have indicated a willingness to address property tax reforms this year.

State Rep. Phyllis Mundy, D-Luzerne, the minority chairwoman of the committee, said the property tax is unfair, but changing it has been difficult.

"Trying to do one statewide fix is difficult to come by, given the diversity of Pennsylvania," Mundy said, referring to the variance in local economic conditions in the state, which are reflected in school district budgets.

House Bill 2230 would allow:

A county to implement a local 1 percent sales tax on all purchases via a countywide referendum. That revenue would offset a reduction in property taxes in each school district through a formula based on student enrollment. A county and municipality to institute — without voter approval — a trade of property taxes for personal income taxes. That revenue would offset a reduction in property taxes by at least 30 percent, and the property tax millage rate would be frozen for the future, although the new income tax rate would be allowed to increase.

Statewide, 78 percent of education funding comes from the local level, according to data collected by the Pennsylvania School Boards Association. Nationally, state funding accounts for about 46 percent of education costs.

Dave Davare, director of research for the PSBA, suggested that changes to the state's charter school funding formula, special education funding and prevailing wage reforms should be included to give school districts more flexibility in spending.